Establishing a company in Spain could be a strategic move for many businesses as it could be considered the gateway to the rest of the European market. Some of its obvious benefits include good tax incentives for companies, provision of highly specialized talents, attraction of foreign investments, well-developed business ecosystem, and impressive infrastructures. However, it is important that one gets into this chore filled with all the know-how about the compliance and other twistedness which the process may bring.
Types of Business Entities
When starting your business in Spain, you can select several types of business entities from a legal structure perspective. Expanding business operations to Spain will most likely entail other types of structuring, depending on the strategy that you are applying in your project:
- Limited Liability Company (Sociedad de Responsabilidad Limitada - S.L.): More than likely, this is the favored format for Spanish businesses, as it affords limited liability to its shareholders and also protects personal assets. It has a minimum capital requirement of €3,000 and is flexible as to management and operation. This can be established either by individual shareholders or an established company and hence constitutes a subsidiary company in Spain.
- Public Limited Company (Sociedad Anónima - S.A.): Ideally suitable for more extensive companies that would require greater capital investment as S.A permits trading of shares to the public. However, S.A has a higher minimum share capital of €60,000 and more rigorous regulations.
- Branch Office: This is an establishment branching out from the foreign company but not acting under the umbrella of another legal personality in Spain. It is a good one for businesses that want to have a presence in Spain without going into the trouble of forming a new company, harnessing the power of your brand.
- Office of Representation: It is created for non-commercial activities, such as market research or client liaisons; it cannot carry out commercial transactions but helps to maintain the presence in the market. This option is advisable if you are starting the assessment of the project to settle in Spain.
General Steps to Follow
- Company Name Registration: Before anything else, you need to check and reserve your company name with the Central Commercial Registry (Registro Mercantil Central). This ensures your business name is unique and legally protected.
- Legal Structure: Choose the proper legal structure relevant to the business entity that best serves your requirements. This will determine your liability, tax liabilities, and operational convenience.
- Deed of Articles of Association: Draft and notarize the company bylaws (estatutos sociales). These documents define the object of the company, governance bodies, and operational rules.
- Appointment of a Director: Appoint a company director or representative (for a branch or representative office). As mentioned already, having a director resident in Spain is very important from a practical point of view, at least for the beginning of operations.
Being a foreigner, the necessity is just of getting an NIE number for the foreign shareholder. In the case of setting up a subsidiary or branch, it would also need to obtain a NIF number for its Parent Company.
Conclusion
Setting up a company in Spain involves multiple steps and compliance with local regulations. By understanding the types of business entities, legal requirements, necessary documentation, registration process, tax implications, and procedures for hiring local employees, you can successfully establish your business and take advantage of the opportunities in the Spanish market.